In a recent interview, we were asked, “how do you keep PearBudget afloat in a world of free apps?”
It’s a good question. After all, people using PearBudget are interested in saving money, right? So why would they pay money, when there are free options out there?
The short answer is this: the return on the investment that our users get far outweighs the cost of their investment.
Think about the stock market for a moment. A good investment in the stock market is going to return 10% a year. That means that for every $100 you put in at the beginning of the year, you end the year with $110. Now take that same model and transfer it over to a budgeting tool. If PearBudget costs $3 per month, it would need to save you $6.30 of money that you would have otherwise spent to match that stock. (That’s the initial $3 cost, and to match the stock, you’d need to end up with 10% more money than you started, so, another $3.30.) We haven’t ever surveyed our users about how much money PearBudget saves them each month, but I know that it’s far, far more than $6.30 per month. In fact, although we don’t really know how she did it, one user said she recently saved $1,500 over two months by using PearBudget.
“Wait a minute,” you say. “That shows that PearBudget returns more value than it requires. But couldn’t I get the same results with no investment? Say … using a free spreadsheet?”
“Good point.” We say. But we’ve heard tales like the following, from Stacey T., more than once:
Hello Charlie and Sarah!
I just wanted to tell you how much my husband and I LOVE PearBudget. I read about it on SimpleMom’s blog in 2008. I signed us up for a free trial and we immediately found it very useful. We had tried Quicken and our own Excel spreadsheets in the past to keep track of our finances but each of those had their problems and didn’t seem to address the needs we had.
That’s what we really like about PearBudget. It’s simple yet it does everything that we need it to do. I personally love that I can enter in what I’ve spent and then have a remaining balance in that category. Often I found myself transferring money from one category to another at the end of the month to make sure that we didn’t go over our overall budget. We love zero balance budgeting and had never used it prior to PearBudget but we’ve found that it is the system that works for us!
We continued to use PearBudget through 2009 however my husband was laid-off in late 2009 and when it came time to renew our subscription for 2010, we decided that maybe we should save the $30 and do it ourselves in Excel. That was a mistake. We never ended up making a budget and so our spending was a financial feast or famine.
My husband just started new employment and we signed up for PearBudget again. We’re so happy to be back!
We’re happy Stacey and her husband are back, too! (By the way, congrats on the new job, Mr. T!)
Ultimately, it’s up to you whether you find a service like PearBudget to be useful or not. But if you’re avoiding it because it costs money, ask yourself whether whatever system you’re using is working, and whether committing to a service that requires a minor investment might yield a far greater return.
The expense of using PearBudget is small. But the expense of not using PearBudget could be an entire order of magnitude (or two!) higher. We obviously have a vested interest in your using PearBudget and subscribing. But you should recognize that you have an even greater interest — after all, it’s your money!